ECONOMICS W/CONNECT+20 >C<
20th Edition
ISBN: 9781259714993
Author: McConnell
Publisher: MCG CUSTOM
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Question
Chapter 31, Problem 9P
Subpart (a):
To determine
Inflationary expenditure gap and recessionary expenditure gap.
Subpart (b):
To determine
Inflationary expenditure gap and recessionary expenditure gap.
Subpart (c):
To determine
Inflationary expenditure gap and recessionary expenditure gap.
Expert Solution & Answer
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7
Real expenditure
in thousands of dollars
6
5
3
2
0 1
Reference: Figure 10-5
O 0.25
O.0.50
2
O 0.75
Refer to the graph above. The mpe equals:
O 1.00
3 4 5 6 7
Real income
in thousands of dollars
AE curve
M8
/se
estion 5
Suppose you were looking at an economy where the consumption function is;
C = 50 +0.75Y
And you know that investors want to spend 500 at every level of income. In other words 1-500
a. What is the equilibrium level of income?
b. If the full - employment level of income is 2000, is there a recessionary gap?
If so, how large is the gap?
c. What will happen to the equilibrium level of income if investors become pessimistic about the
country's future and reduce their investment to 400?
d. Is there an inflationary or recessionary gap now? How large?
marks)
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TV-
BIU AV V T²v / pov
Chapter 31 Solutions
ECONOMICS W/CONNECT+20 >C<
Ch. 31.2 - Prob. 1QQCh. 31.2 - Prob. 2QQCh. 31.2 - Prob. 3QQCh. 31.2 - Prob. 4QQCh. 31.7 - Prob. 1QQCh. 31.7 - Prob. 2QQCh. 31.7 - Prob. 3QQCh. 31.7 - Prob. 4QQCh. 31 - Prob. 1DQCh. 31 - Prob. 2DQ
Ch. 31 - Prob. 3DQCh. 31 - Prob. 4DQCh. 31 - Prob. 5DQCh. 31 - Prob. 6DQCh. 31 - Prob. 7DQCh. 31 - Prob. 8DQCh. 31 - Prob. 1RQCh. 31 - Prob. 2RQCh. 31 - Prob. 3RQCh. 31 - Prob. 4RQCh. 31 - Prob. 5RQCh. 31 - Prob. 6RQCh. 31 - Prob. 7RQCh. 31 - Prob. 8RQCh. 31 - Prob. 9RQCh. 31 - Prob. 1PCh. 31 - Prob. 2PCh. 31 - Prob. 3PCh. 31 - Prob. 4PCh. 31 - Prob. 5PCh. 31 - Prob. 6PCh. 31 - Prob. 7PCh. 31 - Prob. 8PCh. 31 - Prob. 9PCh. 31 - Prob. 10P
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